Articles Posted inFederal Criminal Law

A federal law enforcement investigation codenamed “Operation Varsity Blues” recently resulted in the arrests of dozens of people for allegedly conspiring to fraudulently obtain admissions into selective universities. Fifty people have been accused of working together to bribe university athletic coaches, submit fraudulent college applications, cheat on college entrance exams, and otherwise bribe college officials into admitting otherwise undeserving applicants. The accused individuals include two former Hollywood actresses – Felicity Huffman and Lori McLaughlin (who famously portrayed “Aunt Becky” on the TV show “Full House”) – as well as wealthy hedge fund managers and the chair of international law firm Wilkie Farr & Gallagher, among others. Wealthy parents paid as much as $6.5 million in bribes and fraudulent payments to get their children into the universities of their choice, including Stanford, Yale, USC and others. The case has seized the national attention as an example of the privileged elite abusing their power and influence, and the Department of Justice states that this is the largest college admissions scandal that it has ever prosecuted.

The case began as many federal investigations do – with an undercover cooperator. Somehow, law enforcement investigators with the FBI identified William Rick Singer, the founder and chief executive officer of a nonprofit “college placement organization” called the Key, as a person engaged in unlawful activity. Though the precise details have not yet been shared, it is clear that they ultimately confronted him with the evidence of his illegal activity and made a deal with him: cooperate against the people who had enlisted his help in order to minimize his eventual punishment.

Mr. Singer then started recording his telephone calls and conversations with his criminal clients. Those calls apparently revealed a wide-ranging series of scams designed to get students into the schools of their choice. For example, Singer arranged for students who had struggled on the college entrance exams to get favorable disability diagnosis from an enlisted medical professional so as to get more time to take their tests. Then, he also arranged for the prospective students to take their college placement tests under the supervision of a paid-for proctor who either corrected their answers or permitted someone else to take their tests for them. Singer made arrangements to have students appear to be successful athletes when they were not, or flat-out bribed college athletic coaches into agreeing to tell the admissions office that they needed the students for their college sports teams. Some of the college coaches were allegedly paid hundreds of thousands of dollars to fraudulently accept students onto their teams (and therefore, into the school) without the relevant athletic credentials.

The criminal defense attorneys at Galluzzo & Arnone LLP have successfully represented many people charged with money laundering in federal court. This serious accusation can result in very significant penalties, including huge fines and lengthy prison sentences. However, these charges are also frequently quite defensible, too. As such, if you or a loved one have been accused by federal prosecutors of money laundering, you should strongly consider contacting Galluzzo & Arnone’s team of former prosecutors.

Money laundering charges typically go hand-in-hand with other related criminal charges brought by law enforcement. Individuals involved in narcotics trafficking, loansharking, racketeering, or Medicare fraud, for example, usually conduct their business in cash for understandable reasons. The problem that these people oftentimes face, however, is that they cannot use their criminal proceeds to purchase things that they want to buy, like real estate for example. This is when money laundering becomes relevant.

Typically, money laundering charges arise when a person with a quantity of illegally-derived cash wants to put the money into a bank account or buy assets with it. A criminal might seek to launder his or her own illegal money by depositing it into a bank account or wiring it to another account. He or she might also enlist the assistance of a professional launderer who takes a percentage of the laundered funds in exchange for depositing them into an account or investing them in some business or asset. The criminal with cash may also manipulate an unwitting novice into laundering it for them, so as to escape responsibility in the event the laundering is discovered.

Between 2007 and 2016, over 58,000 unruly passenger incidents were reported on International aircraft in-flight by the International Air Transport Association (IATA). In 2016, the rate was one incident for every 1.424 flights. The majority of reports were Level 1 incidents which are verbal in nature and can usually be dealt with to a successful conclusion by crew using de-escalation training. 12% of reports relate to Level 2 incidents which involve physical aggression to others or damage to the aircraft. Intoxication from alcohol or drugs was identified as a factor in 33% of reported cases. Unruly passenger incidents include violence against crew and other passengers, harassment, verbal abuse, smoking, failure to follow safety instructions and other forms of riotous behavior. Recently, a woman was removed from a Frontier Airlines flight when she attempted to fly with her “emotional support” squirrel and then refused to get off the plane when she was told rodents, including squirrels, are not allowed on Frontier flights. Frontier, like many airlines, has a policy on emotional support and trained service animals allowing cats, dogs and miniature horses. Federal regulations do permit them on airplanes but give the airlines permission to turn away unusual animals, like squirrels. The passenger was advised of the policy and asked to deplane, but when she declined, other passengers were forced to deplane so that authorities could remove the woman from the aircraft.

Although such acts are committed by a tiny minority of passengers, they have a disproportionate impact, create inconvenience, threaten the safety and security of other passengers and crew, and lead to significant operational disruption and costs for airlines. The aircraft cabin is a unique space and it is necessary to recognize the limitations that exist when you are flying in the air in a metal tub. As a result, these sorts of in-flight disturbances frequently result in law enforcement officers becoming involved.

One of the likely reasons for the increasing reports of disruptive passengers is the existence of a gap in international law and the fact that many countries don’t apply their laws to foreign aircraft arriving on their soil. Passenger behavior is subject to the law of the country the plane is registered in. The passengers responsible often walk away and victims of violence can’t always take practical legal actions. Yet, American Federal law bans passengers from interfering with flight crew. Also, certain acts which would be punishable if they occurred in the special maritime and territorial jurisdiction of the United States, defined in 18 U.S.C. § 7, are made criminal under 49 U.S.C. § 46506(1) (formerly 49 U.S.C. App. § 1472(k)(1)) if they occur within the special aircraft jurisdiction of the United States.

A huge percentage of the criminal cases in federal court involve charges relating to the trafficking of drugs, narcotics, and controlled substances. Convictions for these crimes carry serious penalties and sometimes involve mandatory minimum prison sentences. Usually, a person accused in federal court of possessing or trafficking controlled substances is charged with violating 21 USC 841, which makes it a crime to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance. Section 841(b) sets forth the potential penalties for this offense, and it depends primarily upon the quantity of controlled substance possessed/distributed in the aggregate. What matters for sentencing purposes is not the number of transactions or the frequency of the activity, but the total volume of drugs possessed or distributed over time. If the quantities involved surpass a certain threshold (depending on the drug), as set forth in Section 841(b), then there can be serious mandatory minimum prison sentences for the offenders. Those mandatory minimum sentences notwithstanding, the potential penalties for these offenses are governed by the complex system set forth in the federal sentencing guidelines. For more on the federal sentencing guidelines, click here.

Federal cases involving narcotics charges typically are the result of long-term investigations by the FBI, the DEA, Homeland Security, or a joint task force involving local police like the NYPD. As such, there are oftentimes wiretaps, surveillance tapes, confidential informants, and search warrants. An effective defense requires an attorney who can review the evidence and the law enforcement processes to determine whether any constitutional rights were violated.

Many unfortunate individuals never actually possessed or distributed narcotics but nonetheless find themselves charged in federal court on account of the conspiracy laws encapsulated in 21 USC 846. That statute explains: “Any person who attempts or conspires to commit any offense defined in this subchapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.” Basically, this means that a person who plays any knowing role whatsoever in another person’s illegal business is criminally liable for the entirety of that conduct. For example, a person who introduces two people for the purpose of a drug transaction can be expected to be charged as an equal to whatever drug transaction ultimately occurred. A person who acts as a lookout during a drug transaction could be treated as equally culpable to the seller of the narcotics. A person who simply rents an apartment to someone whom he knows is dealing drugs from the apartment could be guilty of “conspiring” to assist the dealer. These are just a few examples of people who could be charged in ways that seem unfair in light of their relatively modest role in the crime. We have however defended many girlfriends of drug dealers and casual acquaintances of true criminals who have found themselves knee-deep in serious federal cases after having had only fleeting or tangential involvement in the cases. But this is the reality of federal conspiracy law.

From at least in or about January 2016, up to and including July 2018, in New York and New Jersey, Mikuki Suen, 43, Jian Min Huang, 42, Songhua Qu, 54, Kin Lui Chen, 53, and Fangrang Qu, 31 and others known and unknown allegedly smuggled hundreds of thousands of pairs of fake Nike Air Jordan sneakers. The five accused fake-shoes traffickers were arrested for having counterfeited over $70 million in Fake Nike shoes and sold them to buyers on the U.S. market. The NYPD and the Department of Homeland Security received the help of a confidential source who helped make numerous purchases during the investigation. This confidential source has been a law enforcement source for approximately two years.

Nike’s Air Jordan line of sneakers are some of the most popular and expensive athletic shoes in circulation. Nike has released a different Air Jordan model almost every year since the shoe line was first introduced in 1984. Many of these models are known by their model number, like the Air Jordan XIII, the 13th model, and some models are known by the year of introduction, like the Air Jordan 2009. Air Jordan sneakers can cost from approximately 100$ to the thousands of dollars, depending on color and design.

More than 42 containers carrying nearly 400 000 pairs of the trendy fake sneakers traveled from factories in China to Port Newark. These sneakers were produced to resemble Air Jordan sneakers in design and color but are “generic” (the “Generic Air Jordan”). They were imported into the U.S. without the inclusion of logos that are trademarks registered with the United States Patent and Trademark Office (“USPTO”). Once the Generic Air Jordan arrived in the U.S., they were altered within the New York area to add trademarked logos to the shoes in warehouses in Queens and Brooklyn. Once this alteration took place, the shoes were considered “counterfeit”. Finally, the Counterfeit Sneaker Ring processed with the distribution of the fake shoes within the U.S. at a significant profit.

Today, a federal jury in Virginia found President Trump’s former campaign manager, Paul Manafort, guilty of eight of the eighteen crimes contained in an indictment filed against him. Specifically, Manafort was found guilty of five tax fraud charges, one charge of hiding foreign bank accounts and two counts of bank fraud. The question now is how much jail time he will receive from the sentencing judge.

As a preliminary matter, for the purposes of this analysis, we assume that Mr. Manafort will not be pardoned by the President. Also, we assume that Mr. Manafort will not be convicted of any other charges. The judge in this trial declared a mistrial as to ten of the eighteen counts in the indictment on account of the jury’s inability to decide guilt or innocence on those charges, but that does not mean that Manafort is clear of those charges. Indeed, prosecutors could attempt to convict him again with a new jury. However, I expect that will not happen, as the prosecutors are likely satisfied by the result, and convicting Manafort on the remaining charges would not really change things very much.

Federal sentencing can be extraordinarily complex and is often very uncertain. By statute, a sentencing court must impose a sentence “sufficient, but not greater than necessary,” to serve the ends of justice. 18 U.S.C. § 3553(a). A sentencing judge is obviously constrained by the statutory maximums and minimums for the crimes of conviction, but oftentimes, the crimes have enormously wide sentencing possibilities (for example, the bank fraud charge for which Manafort was convicted has a potential statutory sentence of between zero and thirty years in prison, 18 U.S.C. 1344). So, federal judges look to the U.S. Sentencing Guidelines, promulgated by the federal government.

It can be somewhat dangerous for people to travel in and out of the United States with large quantities of cash. Section 5316(b) of the Title 31 of the U.S. Code requires individuals to file reports with U.S. Customs when “knowingly transporting [or] being about to transport monetary instruments of more than ten thousand dollars at one time.” The failure to file such a report is a violation of 31 U.S.C. 5361(a)(1)(A), and if a Customs officer discovers an individual who has misrepresented the amount of cash he or she is carrying, that officer will almost certainly seize the cash for forfeiture in addition to arresting the defendant. Those individuals arrested for failing to disclose their cash may also be subject to the charge of lying to a federal agent, in violation of 18 U.S.C. § 1001.

The penalties for this crime can be significant depending on the amount of cash that was being concealed. For most “bulk cash smuggling offenses,” the federal sentencing guidelines set a base offense level of eight (meaning 0-6 months in jail), see U.S.S.G. 2S1.3(a)(2) and U.S.S.G. 2S1.3(b)(1)(B), plus enhancements based upon the amount of money. See U.S.S.G. 2B1.1. Accordingly, for illegally smuggling, say, $20,000, the federal Sentencing Guidelines might suggest a sentence of 10-16 months in prison for first-time offenders (though this figure is highly dependent upon other variables).

People are often wary about revealing the amount of cash they are actually carrying through Customs because they are afraid that the cash will be investigated. The cash may constitute the proceeds of a crime, or suggest that someone has failed to disclose all of their income to the tax authorities. Regardless of whether the cash is actually illegal or not, however, the Customs officer is likely to seize a significant quantity of cash (50-100% of it, normally) and keep it unless and until the legitimate source of the income is sufficiently proven. This process of contesting forfeiture can take months and typically requires the assistance of an attorney to stand a solid chance of success.

Most people do not realize that it is a federal crime to lie to a federal law enforcement agent. However, 18 U.S.C. § 1001 makes it a federal felony, punishable by up to five years in prison (or 8 years for a case involving terrorism), to “knowingly and willfully falsify, conceal, or cover[] up any trick, scheme or device a material fact… or make[] any materially false, fictitious, or fraudulent statement or representation” in regards to a federal law enforcement investigation. It also prohibits the knowing and willful making or using of any “false writing or documents containing the same to contain any materially false, fictitious, or fraudulent statement or entry.” Thus, for example, a criminal suspect who lies when questioned by an FBI agent can be guilty of a serious crime, even if that suspect is not actually guilty of the underlying crime for which he was being investigated. This situation often arises when people who have received subpoenas from law enforcement agents unfortunately sometimes agree to speak with agents or prosecutors but then make statements that those agents later discover to be untrue.

Most of the time however, people accused of this crime are frequently also charged with other crimes, too. For example, this charge is frequently brought against those who lie to U.S. Customs officials about their possession of cash, in conjunction with a charge of 31 USC § 5361(a)(1)(A). It is also common in health care fraud matters for a defendant to be charged with violating both 18 U.S.C. § 1035 – making false statements relating to health care matters – as well as 18 U.S.C. § 1001. In any case, the additional charge for making false statements may not be as serious as the underlying crime for which the defendant was originally investigated, but the fact that the defendant lied to law enforcement can be viewed as an “aggravating factor” by the judge at sentencing, meaning that it could seriously increase the ultimate sentence that the defendant will serve.

Though the maximum possible statutory penalty for this offense is five years in prison, pursuant to the Federal Sentencing Guidelines, the base offense level for this crime is 6. This base offense level means that a person convicted of this crime (and this crime alone) is more likely to receive a sentence of between 0 to 6 months in prison.

Delayed flights, crowded airplanes, rude people, and stressful rides to the airport can make airline travel particularly stressful. Sometimes, rude flight attendants or passengers fueled by alcohol can cause tempers to flare, and physical fights sometimes erupt during the flight. These fights or disputes can result in federal criminal charges, as “the special maritime jurisdiction” of federal courts applies to airplanes coming into the United States or traveling across state lines.

Federal assault charges can apply to any person who causes an offensive physical touching to another person on the airplane. Certainly, that can apply to physical violence, but it might also apply to unwanted sexual touching of another person as well. Assaulting another person on an airplane is normally a petty offense under federal criminal law, pursuant to 18 U.S.C. § 113(a)(5). (Those accused of sexually assaulting others on airplanes can also be prosecuted with the more serious felony charge of 18 U.S.C. § 2244(b), however, and attempts to maim or murder can be prosecuted as felonies, as well). That means that the crime is a misdemeanor with a maximum prison penalty of six months and/or a fine of $5000.00. Also, it means that the defendant is not entitled to a jury trial. Instead, the defendant must have his case tried by a federal magistrate judge.

Galluzzo & Arnone recently earned an excellent result for our client in Brooklyn federal court (the Eastern District of New York). Our client was originally arrested at JFK Airport in 1990 and charged with lying to a U.S. Customs agent about a significant amount of cash that he had in his possession at the airport. Federal prosecutors indicted him for two criminal charges related to this deception, in violation of 31 USC 1536(b) and 18 USC 1001. However, rather than return to court and defend himself, he returned to his home country and remained there for the next 28 years (note: he was not our client in 1990). Later, in 2018, he attempted to come back to the United States to visit his family but was arrested at the airport pursuant to a 1990 warrant for failing to appear in the Brooklyn federal court as required.

The sentencing range for the original criminal charges under the Federal Sentencing Guidelines was 12-18 months (Base Offense Level of 13 with a two level increase for obstructing justice offset by a possible two level reduction for acceptance of responsibility following a guilty plea). Of course, the client also now faced the possibility of additional criminal charges and penalties for acting as a fugitive and failing to appear in court. The prosecution initially submitted a proposed plea agreement whereby the client would receive a sentence of between 12-18 months in prison.

However, the attorneys at Galluzzo & Arnone presented to the federal prosecutor considerable mitigating evidence of our client’s life story and family, as well as circumstances surrounding his original crimes. Ultimately, the prosecutors agreed to allow the client to plead guilty to the second count of the original indictment and avoid additional charges for acting as a fugitive. The second count of the indictment carried a 0-6 month Guidelines sentence, representing a considerable savings on the original 12-18. Then, we were able to persuade the judge to schedule an expedited sentencing hearing and ultimately to sentence our client to time served. Thus, instead of receiving a sentence of between 12-18, as it originally appeared our client would, our client received a sentence of less than four months. Obviously, the client is quite happy with the result.